How do hedge funds hide order execution?

Discussion in 'Order Execution' started by gymratnyc, Apr 20, 2008.

  1. How do hedge funds or mutual funds hide order execution? I mean if they place a big trade at their broker, don't people know what they are buying? How do they prevent their brokers from leaking or copying their positions? Or for that matter their own employees at their office?
  2. Google dark pools ,algorithmic trading, and or third party exchanges.
  3. google "smarter than you"
  4. Dark pools ATS/ECN's like BIDS, Liquidpoint etc..

    For large hidden option blocks check out these guys -
  5. Only the very large and famous hedge funds hide their orders, i.e. Reinassance.

    Usually they use several brokers.

    Be aware that even the large hedge funds manage small amounts compared to the vast amounts large brokers manage for all their clients.

    Let's suppose you know Reinassance clears trough Goldman.
    In the tape you watch Goldman is buying for their client accounts, are all those trades for Reinassance?
    Of course not, Jim Simons is only a percentage of all the customers in Goldman Sachs.
    Even a former neighbor had an account at GS.
  6. How do hedge funds hide order execution?

    Very, very carefully! :cool:
  7. Rocko1


    Whoa, does this mean option volume ratios at aren't reliable at all?
  8. The preferred method for Hedge Funds to keep trades out of public view has evolved to be dark pools. The number of dark pools and amount of volume executed via these venues has increased greatly over the past couple of years.

    More information can be found here:
  9. kjsnow25


    it's not all dark pools. That's just as tough to hide, not get gamed, etc. They're using a combination of brokers, DMA, and using old relationships to try to keep things quiet. There will always be some form of leakage. Also, you'll see these guys ALWAYS looking fo rnew methods, technologies, etc - that's why buy side trading conferences are all about. No algo is going to mask it all.

    Some tend to try to use brokers where there is huge, anonymous quant type flows. It's a good way to snake in some names before people realize what's going on. They have to mask huge orders anyway they can, because guess who the phone brokers call once they have a large order? Yes, the natural on the other side.

    It's not just dark pools....
  10. pools...icebergs... and many dvp accounts across the street
    #10     May 2, 2008